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US markets closed mostly down on weak economic reports

05 Sep 2012 Evaluate

The US markets closed mostly down on Tuesday, as investors faced two economic reports showing sluggishness in the US economy but speculation over Apple Inc.’s next iPhone launch lifted tech sector and erased losses in broader indexes. The manufacturing activity in the US dropped for the third straight month, and construction spending also slowed. The Institute for Supply Management manufacturing index fell to 49.6% in August, lower than the 49.8% in July and the worst reading since July 2009. The Institute for Supply Management’s factory gauge, which contracted for a third month in August, is lowest since July 2009. Separately, construction spending declined 0.9% in the month from August after gaining for three months on increased home and apartment construction. Construction activity is up 11.8% from a 12-year low in February 2011.

Besides, the latest round of economic data from the US, Euro zone, China and Australia signaled weakening global scenario. Investors are still waiting to take cues from jobs numbers due out Friday and to see what Europe's central bankers will do to protect the vitality of the euro. Right now, all economic numbers are viewed with an eye to how they could influence the equation when the Fed decides whether it will announce more quantitative easing at its September 12-13 policy meeting.

In Europe, investors are expecting a central bank action as early as Thursday and political leaders met in Rome and Berlin. Mario Draghi, President of European Central Bank hinted that he is comfortable buying 3-year bond issued by member nations. The widely anticipated and expected action has kept the yields on Spanish and Italian bonds under control. Besides, Moody's lowered the European Union’s debt rating outlook to negative but held its top rating. Andalusia is the fourth Spanish region seeking financial assistance from Madrid. Separately, Spanish unemployment rose in August by 0.8% to 4.6 million as the nation struggles with a cut in government jobs.

The Dow Jones industrial average lost 54.90 points, or 0.42 percent, to 13,035.90. The S&P 500 Index lost 1.64 points or 0.12%, to 1,404.94, while the Nasdaq Composite was up by 8.09 points, or 0.26 percent, to 3,075.06.

The Indian ADRs closed mixed on Tuesday, ICICI Bank was up 0.52%, Dr. Reddy’s Lab was up 0.37% and Tata Communications was up 0.05%. On the other hand, Infosys was down 0.33% and Tata Motors was down 0.24%.

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